European Plan to Put More Women on Boards Runs Into Opposition

LONDON — A planned European Union law to impose sanctions on companies that do not allocate at least 40 percent of the seats on their boards to women has drawn enough opposition from Britain and other countries to risk being blocked before it is officially proposed.

Nine E.U. countries have signed a letter to the European Commission, the Union’s executive agency, opposing the proposed law, which is due to be published in draft form next month.

The proposal has been championed by Viviane Reding, vice president of the commission, who has been pressuring European companies since last year to improve the representation of women in top management or risk having penalties imposed on them.

The signatories argue that although barriers to success for women in E.U. companies are “unacceptable,” national governments should determine what sanctions, if any, should be applied to companies that fail to improve.

Under E.U. voting rules, the proposed law requires the support of a weighted majority of member states in a system based broadly on the size of a country. The opposition of the nine countries that signed the letter could therefore be sufficient to scuttle the plans.

One European diplomat said that many of the countries that signed the letter did not want to kill the proposal outright. They do, however, want to ensure that all decisions on how or whether to enforce quotas remain under the control of national authorities.

In fact, drafts of the plans suggest that national governments would have some influence over sanctions that could range from financial penalties to exclusion from bidding on public contracts.

Still, leaving more discretion to the member states could significantly dilute the plan drawn up by Ms. Reding, who last year issued an ultimatum to European companies to increase representation of women in top management.

The letter also reveals the breadth of opposition from around the European Union to anything that imposes new requirements on business during an economic downturn. That suggests that Ms. Reding will encounter opposition from within the commission itself, where all 27 commissioners need to agree on the details of the proposed law before a draft is published. The measure then must be approved by national governments and the European Parliament before becoming law.

Photo

Viviane Reding, vice president of the European Commission, has championed the proposal.Credit
Yves Logghe/Associated Press

“Thankfully, European laws on important topics like this are not made by nine men in dark suits behind closed doors, but rather in a democratic process,” Ms. Reding said Monday.

The proposal arose after Ms. Reding, in March, concluded that European companies had failed at self-regulation, since only 3.2 percent of the presidents and chairmen of large companies were women and women occupied only 13.7 percent of board seats.

The letter, signed by ministers from Britain, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta and the Netherlands, said the signatories “agree with the commission’s stance that there are still too few women on the boards of publicly listed companies.” It added that the “myriad barriers women encounter throughout their careers are unacceptable.”

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But it said the signatories “do not support the adoption of legally binding provisions for women on company boards at the European level” and emphasized the need for decisions on how to increase the role of women to be left to national governments.

“Many of us are considering or have implemented various and differing national measures on a voluntary and, if appropriate, legal basis to facilitate raising the proportion of women in boardrooms,” the letter said.

“These efforts must be granted more time in order to establish whether they can achieve fair female participation in economic decision making on Europe’s company boards,” it said.

The government in Britain, which is having a double-dip recession, has promised to reduce regulation on business — one reason it has been in the forefront of opposition to Ms. Reding’s plan. The letter is signed by Vince Cable, the business secretary and a leading member of the Liberal Democrats, who are much more positive about Europe than their coalition allies, the Conservatives.

Mina Andreeva, a spokeswoman for Ms. Reding, said Monday that there was considerable backing for the plan, particularly in the European Parliament.

Critics of the proposal say that within the 27-nation bloc, the situation of women is so varied that it would be extremely difficult for some nations to hit the target. A quota might also encourage tokenism, said a European diplomat who requested anonymity because he was not authorized to speak publicly.

“In an E.U. which includes Sweden and Romania and Germany and Greece, I don’t think this would work and it would lead to resentment,” the diplomat said.

A version of this article appears in print on September 18, 2012, on Page B4 of the New York edition with the headline: Proposed Quota for Women in Boardrooms Is at Risk. Order Reprints|Today's Paper|Subscribe